That is how the OECD reporting on Canadian broadband has to be characterized. The same faulty study that we have talked about all summer [such as here, here and here] keeps getting cited as evidence of a supposedly shameful situation for Canadians on the internet. Some have used the flawed reporting to conclude that our industry is in crisis.
Never mind that Google’s global sales president says that Canada has world-class internet and broadband penetration.
The latest woeful citation (in the Globe and Mail Datebook) was one that should have had the writer pause to think about plain reasonableness:
Today’s chart lists the 30 countries and shows Canadians paid about $95 (Canadian) every month for high-speed Web access in September of 2008.
Do you know anyone who is paying $95 every month for high-speed Web access? Seriously. You might have one or two geeky friends who are subscribing to the very highest speed service, but does that quote sound like a fair representation of the Canadian high-speed broadband market?
Earlier in the week, the webcast of the Globalive ownership proceeding allowed us to hear from their lawyer, Hank Intven of McCarthy’s. Hank was a member of the Telecom Policy Review panel and hearing him in action reminded me that it has been more than three and a half years since the delivery of that report.
How time flies.
Since the the panel was struck, we have had a change in government and there have been a number of different Ministers of Industry. Most of the recommendations of the panel have sat on the shelf.
In the report, the panel addressed the subject of foreign ownership restrictions, saying:
Among OECD countries, Canada has maintained one of the most restrictive and inflexible set of rules limiting foreign investment in the telecommunications sector.
The Panel had recommended a multi-phased liberalization:
In the first phase, the Telecommunications Act should be amended to give the federal Cabinet authority to waive the foreign ownership and control restrictions when it deems it to be in the public interest.
During that phase, there would be a presumption that investments in a new start-up telecommunications investment or in a carrier with less than 10 percent of the market are in the public interest.
The second phase would be undertaken after a review of broadcasting policy with liberalization in a manner that treats all carriers (including the cable industry) in a fair and competitively neutral manner.
This is the regime that the Telecom Policy Review Panel had hoped for. Had government acted on these recommendations, we wouldn’t be having the current Globalive paternity test.
However, like many of the other recommendations, such legislation has not even been introduced, let alone passed. As such, the CRTC is left to enforce Canada’s current laws, with its double negatives.
Can Globalive adequately demonstrate that it is not otherwise controlled by non-Canadians?
In some ways, it was fitting that Tim Horton’s HQ was repatriated to Canada yesterday. It was painful for many of us to think of such an icon being headquartered south of the border.
Yesterday also marked the opening of the oral phase of the CRTC’s review of Globalive’s ownership.
How could Globalive’s foreign ownership be in question by the CRTC when it has already passed the standard set by Industry Canada? How much maple syrup needs to run through the veins of its board?
The CRTC’s hearings into the compliance with Canadian ownership and control requirements for Globalive opened with introductory remarks by Chairman Konrad von Finckenstein, setting out the reasons why the review was required.
With an infrastructure that connects virtually every household across the country, telecommunications play a vital role in Canada’s social and economic development. For this reason, the Telecommunications Act states that the control of telecommunications companies must rest in Canadian hands. It further sets out the acceptable level of foreign ownership and control.
In the minds of many observers, one of the key questions is how Industry Canada could have approved the ownership structure for the purpose of licensing, and yet the CRTC has already indicated that, at a minimum, it will require a number of changes to ownership agreements in order to meet its standards.
The opening remarks by the chair addresses this question in part: Industry Canada made its determination under the Radiocommunication Act at an earlier point in time and in the context of awarding a licence pursuant to the advanced wireless services auction process. On the other hand, the CRTC is looking at the issue now under the Telecommunications Act in the context of establishing and operating a telecommunications carrier network. In the chairman’s words, the two agencies may be applying the same test but in a different context and with a different focus.
The other major difference is that the CRTC process is completely transparent, with most of the evidence open to public scrutiny and comment, absent the potential for political intervention – although subject to the possibility of its determination being appealed to cabinet.
Based on the exchanges in yesterday’s hearings, there are some clear concerns about the ownership structure that was presented to the CRTC, but not all of the Commissioners share the view that these can’t be remedied. Today, the CRTC will be examining issues with Globalive in-camera, with redacted transcripts to be produced for parties to review.
The schedule has been modified to enable final arguments to follow the filing of new agreements and allow the transcripts to be produced. I will update when the public hearings are to resume.
In the meantime, can I suggest that eveyone practice: “R-R-Roll up the r-r-rim to win.”
Financial Times has an article called The broadband numbers racket, by former FCC chief economist Thomas Hazlett, now a professor of law and economics at George Mason University.
Hazlett points out that too many people use superficial selection of statistics to bolster questionable policy positions.
Cherry picking broadband penetration numbers to imply the US is slipping into Third World status is fine for a quickie term paper, at least if Wikipedia goes down. But adults ought sort through the multi-dimensional complexity of the real world –
The article refers to a paper published in the Review of Network Economics [pdf, 138KB]. The paper looks at different models of regulation on broadband networks and among the findings, it states
incentives for network investment decline when network owners lose a set of valuable property rights.
Both articles – from Financial Times and Network Economics – make an interesting read.
September 22, 2009 September 22, 2009 / 2 Comments
FCC Chair Julius Genachowski, delivered a speech to the Brookings Institute yesterday and he proposed adding two new principles to the FCC’s internet freedom principles: non-discrimination and transparency.
It is quite likely that you will read excerpts from the speech that will fail to include some of the qualifying language he had regarding non-discrimination:
This means they [network operators] cannot block or degrade lawful traffic over their networks, or pick winners by favoring some content or applications over others in the connection to subscribers’ homes. Nor can they disfavor an Internet service just because it competes with a similar service offered by that broadband provider. The Internet must continue to allow users to decide what content and applications succeed.
This principle will not prevent broadband providers from reasonably managing their networks. During periods of network congestion, for example, it may be appropriate for providers to ensure that very heavy users do not crowd out everyone else. And this principle will not constrain efforts to ensure a safe, secure, and spam-free Internet experience, or to enforce the law. It is vital that illegal conduct be curtailed on the Internet. As I said in my Senate confirmation hearing, open Internet principles apply only to lawful content, services and applications — not to activities like unlawful distribution of copyrighted works, which has serious economic consequences. The enforcement of copyright and other laws and the obligations of network openness can and must co-exist.
FCC Chair Genachowski also called for the principles to apply to all forms of internet access, including mobile, but he also recognized that “how the principles apply may differ depending on the access platform or technology.”
Keep in mind that these are proposals – the FCC will be expected to issue a notice of proposed rulemaking to invite public consultation in fleshing out the details. As yesterday’s speech indicated, there will be an open process to figure out how to implement these principles. This speech is simply the first step in a long process: FCC to create and publish a Notice of Proposed Rulemaking; open consultation; deliberation; ruling.
While my goals are clear — to ensure the Internet remains a free and open platform that promotes innovation, investment, competition, and users’ interests — our path to implementing them is not pre-determined. I will ensure that the rulemaking process will be fair, transparent, fact-based, and data-driven.
As I have written a number of times in the past, the US doesn’t have an equivalent of Section 27 in its Telecom Act, so non-discrimination isn’t enshrined in their environment absent a new explicit rule. Canada benefits from technical neutrality in its legislation, leaving the US to play catch-up.
Transparency was a key issue raised by many parties in Canada’s Internet Traffic Management Proceeding. Improving the information of users has been an issue around the world and we can expect to see improved disclosure by all service providers driven by the marketplace, if not regulation.
With the CRTC’s ruling on traffic management expected before the end of the year, Canada will continue to lead its neighbours to the south in defining an internet regulatory framework.
